This week I wrote about why you should be plugging others in your field, today we’re going to address the topic of referral fees.
For those that may not be familiar with the concept it goes something like this.
I send you work and because I was nice enough to send you work, I ask for 10% (or whatever the number is) of the contract value.
At first glance that sounds just fine. I mean it’s work you wouldn’t have had if I hadn’t sent it to you. Don’t I deserve something as compensation for sending you work?
I never ask for referral fees, and when anyone has sent me work and said they want I referral fee, I turn it down. I don’t do referral fees.
Why No Fees?
I never ask for referral fees first because it feels super odd to me. I’ve got work I just can’t do. I’m going to have to say no to it anyway, but because I’m sending it to you I want money.
Wait, read that again. I couldn’t have done the work anyway. Either I was too busy, or it was just not something I could tackle. So I wasn’t going to make money off the project, but now through some magic I feel that I deserve 10% of a contract I can’t do?
That just don’t seem like sound logic to me.
Second, when I send you work my first and only real priority is that you and the client are a great fit. Time and time again I’ve found that taking the time to get a client a great fit with another contractor has paid of long term.
Either the client comes back to me next time (even if they were happy with the contractor) because I found them the best person for the job, and didn’t charge for it. Or when the contractor has some work they can’t do, I’m at the top of their mind.
Both of those things is worth way more than 10% of a contract.
If you do ask for referral fees, why?
Update July 10, 2013: Interesting differing opinion